Horizon Blue Cross Wins Round On Controversial Tiered Insurance Plan

Appeals judge rejects challenge by group of hospitals over state approval of OMNIA plan

In a decision that supporters said could benefit patients and those paying for their healthcare far into the future, a New Jersey judge upheld the state’s approval process for the controversial OMNIA insurance plan introduced last year by Horizon Blue Cross Blue Shield.

Appellate Judge Michael Haas issued an opinion Tuesday that said the state Department of Banking and Insurance followed the current state laws and their own regulations during the “exhaustive and deliberate” review of OMNIA, which ended with their approval of the product in October. Many of the concerns raised by the 17 hospitals that challenged the original ruling can only be addressed by the state Legislature, he said.

The hospitals filed a lawsuit that claimed Horizon’s creation of the so-called tiered plan was “arbitrary, capricious and unreasonable” and would harm their facilities economically and leave patients with fragmented care. On Tuesday, Steven M. Goldman, a spokesman for the 16 hospitals still involved -- and a former DOBI commissioner -- reiterated those concerns and said the group is considering an appeal of the decision to the state’s Supreme Court.

Tiered plans are part of a growing national trend as insurance companies find new ways to reduce escalating healthcare costs. These plans, which can save consumers thousands on annual premiums, encourage patients to visit a specific group of providers in exchange for out-of-pocket savings. While these providers get lower reimbursements from the insurance company, they stand to make up the difference by seeing more patients. OMNIA also includes a “wellness” component that rewards doctors for keeping patients healthy.

The plaintiff hospitals -- which were excluded from the premium, discounted tier of providers, but are still in the OMNIA network -- claimed the tiers Horizon constructed failed to meet the state’s “network adequacy standards” to ensure patients have proper access to diverse providers. They also contended they were not given adequate opportunity to participate in the top tier and said the impact of the plan could harm their bottom lines and therefore endanger public health. Most of these hospitals are urban, safety net facilities that care for a high percentage of indigent patients with few other options.

Writing for a three-judge panel, Judge Haas found that Horizon had met DOBI’s existing requirements to ensure patients have access to a variety of providers. In addition, the rules don’t require the state to consider the impact on individual hospitals or doctors, or the public interest, when making decisions about insurance networks, he wrote. Finally, Horizon has the right to structure a tiered product without sharing the details publically, Haas noted.

Horizon spokesman Kevin McArdle said they were pleased with the court’s findings and its rejection of the “arbitrary, capricious and unreasonable” charges in particular. “This decision is another win for consumers seeking relief from skyrocketing medical bills,” he said. “Health care costs are a problem for New Jersey employers and patients and, while some are content to be part of the problem, Horizon is committed to being part of the solution.”

Goldman, on the other hand, said his clients were “deeply disappointed” in the ruling and they continue to believe DOBI approved OMNIA improperly. And, whether or not any appeal proceeds, he noted that Horizon’s legal battles will continue. On Wednesday the company is scheduled to appear in a Trenton court to defend its refusal to release a consultant’s report that was used to help build the OMNIA network.

“Horizon's lack of transparency in the selection process deprives healthcare consumers of the ability to make intelligent healthcare choices and destroys any legitimacy for its OMNIA plan,” Goldman said. “The question that must continue to be asked is what is Horizon hiding and why?”

Ray Castro, a healthcare expert with the liberal-leaning New Jersey Policy Perspective, would prefer to see the focus move from the courts to the actual meat of the issue: How value-based tiered plans like this can better help patients and control costs. As Judge Haas wrote, this is the purview of elected officials who are working on several measures that would further regulate how tiered plans like OMNIA are created. At least a half dozen bills on tiered health insurance, with versions in both houses, are under consideration this session.

“I’d like to think this is the end of the litigation, and maybe there’ll be a lot more substantive discussion about real policy issues,” Castro said. “I think it’s legitimate that the Legislature revisit and review this issue.”